International Association of Investors in the Social Economy
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Organisation profile

Country: 
Chile
Representative: 
Sergio García Regonesi
Type of Organisation: 
Social Finance Institution
Website: 
www.indes.cl
Membership: 
Full

Since 2011 Indes has become a financial company for Small, Medium and Micro enterprises, focused on factoring and offering as complementary products credit and leasing to “prime”customers.

We finance their needs of liquidity, working capital and investment. For that purpose we have a experienced “on the field” Sales Force and commercial managers as leaders of each group. They visit permanently our clients and anticipate their needs (in Chile no customers come through the door). 

We have based our activities in the quality of our human resources and services, supported for an each day better technological platform and administration tools.

In 1987 Indes was founded with the support of Inversiones Norte Sur S.A. (a private Chilean Investment company), SIDI France, OIKOCREDIT Holland, and Fundación Para el Desarrollo an institution of the Archbishopric of Santiago which was the main shareholder of Banco Del Desarrollo (today Scotiabank).

INDES started out in the Microenterprises Venture Capital. After some years of operation, in 1993, Indes faced certain difficulties that led to the decision of leaving Venture Capital and face Leasing and Credits products for micro, small and medium enterprises.

Between 1992 and the end of 2000, INDES carried out more than 1.000 leasing operations and 4.500 credits.  In June of 2000, leasing operation accounted for 60% of the institution’s active loan portfolio and 40% of credits.

In September 2008 INDES started with factoring operations, reaching by the end of 2010 an 11% of the loans portfolio.

By middle 2009 the Board decided to look for a new General Manager because they believed that the company was not running as expected. It was a long process and finally they hired a new General Manager by the end of 2010.

After analyzing the company’s performance the new General Manager concludes that:

- The company has not moved forward in terms of commercial activities (old fashion products and lack of sales efforts).

- No proactivity for new business (i.e.: no replacement for the operational leasing contract with Banco Desarrollo which represented 20% of total income for 2008 and 2009).

- The funding needed for operations were obtained from Banco el Desarrollo (controlled by the same principal shareholders), CORFO and FOSIS, both governmental financial institutions (subsidized prices). The company has not the abilities to raise funding from Banks and private financial institutions.

- Some values of the assets did not represent the reality, low portfolio quality and provisions insufficient for loans portfolio. At the beginning of 2011, internally we start the analysis of loans portfolio and assets. On April 2011 an independent auditor was hired to make and study, and results confirmed the initial appreciation.

- Risk analysis department reporting to Commercial Area was not healthy.

- Operations structure unable to control and support commercial activities. No opposition controls available.

- Lack off MIS systems and reports for “decision making” and performance control.

 

After having explained the situation of the company to the board, the following actions were implemented:

- A new commercial strategy was defined, based in repayment capacity of clients and focused on factoring products.

- Redefinition of products including profitability.

- A new sales force was implemented with experienced people. Two new experienced Commercial Managers were hired, focused on sales and team coaching.

- A new independent Risk Area was implemented with experienced people.

- Risk Analysis and policy were defined.

- Portfolio follow up.

- Responsibility for credit committee approvals and attributions.

- A new experienced Operations Manager was hired with responsibility in:

- Credit Control: a new experienced head was hired and is responsible for the integrity of credit and acquired factoring documents. Also has the responsibility for guarantees.

- Collections: a new experienced head was hired and is responsible for the on time collections of factoring invoices and past due loans. Also is responsible for legal collections with external lawyers.

- Systems and MIS: all system was improved and a complete set of reports for management and board were implemented.

- New system for factoring, accounting, collection and others.

- Systems and report of loans portfolio.

- New reliable hardware and external back up.

- Credit operation and documents digitalized.

- Accountant and treasury: new systems and procedures were implemented.

- To get funding from Banks a new strategy was implemented and we provide them with quarterly information. We started operations with 4 new bank and financial institutions. Today are 14 in total.

- An aggressive plan of additional provisions and recovery of past due loans from previous years was established as a priority and is monitored in a monthly basis in the Board meeting. The plan was approved by the board knowing that net income will drop dramatically.

 

At present the structure of all procedures and directions in the company considers controls by opposition and independence between commercial and operational areas (controls and support activities).

Also a strong MIS system is available for the administration and the Board.

As the focus of the company is factoring, all necessaries activities and structures are strongly supported.

In December 2012, Indes portfolio is as follows: leasing 6%, credits 63 % and factoring 31%. Clients are mainly Medium and Small enterprises.